USD-JPY fell below 101.50 for the first time in three weeks, while EUR-JPY clocked a one-week low. Hefty Nikkei losses amid a general risk-off environment along with the minutes to the Apr 7-8 BoJ supported the yen. The minutes signalled that the central bank doesn't see that an expansion in its already aggressive policy would be necessary. Former BoJ executive director Hayakawa also warned that further BoJ easing would only bring forward a collapse in JGBs, and that the central bank was in any case already winning the battle to drive CPI higher. Elsewhere, NZD-USD tumbled over 50 pips, to levels below 0.8700 after RBNZ's Wheeler said that the NZ dollar is overvalued. The AUD was also softer, not liking the risk averse backdrop. AUD-USD softened below 0.9350. EUR-USD dipped fractionally, to the 1.3920 area. Data were net disappointing today. Japan April services PMI for April fell to 46.4 from 52.2. Australian retail sales for March came in at 0.1% m/m, below the median forecast for 0.4%m/m.

[EUR, USD]EUR-USD rallied above 1.3900 following upside surprises in Italian and Spanish PMI numbers on Tuesday. Signs of improvement in the troubled southern Eurozone periphery tend to go down well in markets. The euro logged a peak of 1.3951. The break of 1.3900-1.3905, the latter level being the Apr-11 peak, is a bullish development for technical analysts, and the 1.3966 major-trend peak, which was clocked in March, has now swung back into scope. We have essentially been seeing a pricing-out in chances for aggressive ECB easing measures, though we think that the bullish market will likely pause into the central bank's meeting and press conference on Thursday. We also don't believe that fundamentals would justify a sustained break above 1.4000, as U.S. growth should pick-up pace through the year following a weather-affected Q1.

[USD, JPY]USD-JPY fell below 101.50 for the first time in three weeks, while EUR-JPY clocked a one-week low. Hefty Nikkei losses amid a general risk-off environment along with the minutes to the Apr 7-8 BoJ supported the yen. The minutes signalled that the central bank doesn't see that an expansion in its already aggressive policy would be necessary. Former BoJ executive director Hayakawa also warned that further BoJ easing would only bring forward a collapse in JGBs, and that the central bank was in any case already winning the battle to drive CPI higher. Bigger picture USD-JPY remains entrenched amid a broad sideways range, roughly contained within 100.00-105.00, which has been in place since early January. This stasis may persist for some time, though technical analysts will be marking this as a potential topping formation after the steep rally from levels around 75.0 that was seen during the second part of last year.

[GBP, USD]Sterling should remain well bid. Cable came within a few pips of 1.7000 yesterday following a strong PMI services survey out of the U.K., which rose a nine-month peak of 58.7 and was well up on the market expectation for an unchanged 57.6. Overall, incoming data have signalled a mini-revival in the pace of economic expansion with the implication that the BoE is increasingly likely to be the first major central bank to tighten policy following the multi-year policy stasis.

[USD, CHF]EUR-CHF edged below the Apr-28 low and toward the 1.2150 level. Lower stock markets and the situation in Ukraine have inflated the franc's safe-haven premium. The cycle low of 1.2104 and 1.2100 are considered key support levels. The threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying to some extent. SNB's Jordan repeated recently that the central bank remains committed to defending the currency cap.

[USD, CAD]USD-CAD has extended lower, below 1.0900 after giving up the chase above 1.1000 last week. The Arp-9 three-month low of 1.0858 now swings back into view. Bigger picture, USD-CAD has been in a consolidation phase since late January following a four-month rally period from sub-0.9700 levels. The bias has tilted to the downside, toward 1.0700.